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It's A Family Affair: MBAs Set To Take Over Business Empires

Family businesses have always played a major role in the global economy. The next generation of family business leaders are turning to MBA programs to give their brands an edge.

By  Seb Murray

Wed Feb 12 2014

There is a pocket of the MBA community that is set to take over companies that have been in business for decades. There are a few who will inherit established empires and sleek operations, and they are turning to business school to equip themselves for the challenges that lie ahead.

If today’s business school students are tomorrows business leaders, then the minority that enter family firms are, perhaps, already set for life. But these aren’t necessarily your archetype slackers, college drop-outs surviving on their parents’ success.

There are those that have an easier ride, but the vast majority of MBAs with surnames that smack of high-street brands want to earn the right to run family business empires, and work just as hard as peers to see them succeed.

And despite an element of discretion, family businesses have always played a major role in the global economy. The Family Firm Institute, an association for professionals serving the family enterprise field, estimates that family businesses create up between 70 and 90 per cent of global GDP annually.

In the United States, those companies comprise around 80 per cent of all business enterprises. In Europe, family firms represent 75 per cent of all businesses and employ half the work force – and in Finland and Estonia, a staggering 90 per cent of companies are categorized as family businesses.

What’s more, these family-run empires are often considered more resilient in times of economic instability. According to the Family Business Review, in the US, more than 30 per cent will survive long enough to see the business taken over by the second-generation. When you consider that three out of four of some start-ups in the States fail, these are encouraging statistics.

Those who have worked in their family’s business often turn to MBA programs to develop leadership skills, says Santiago Hoyos, a student at ESSEC Business School and vice-president of his family’s manufacturing services company.

“I had a sense that I needed to acquire more skills in order to optimize the opportunities of the company. I wanted to learn how to manage people and incentivize them,” he says.

Santiago’s grandfather founded their company, San Lorenzo S.A, around 40 years ago. They began in the automotive sector, supplying parts, but the production has shifted to new products in the gardening industry as well as small engines which are used in lawnmowers.

He joined his father at the company, based in Bogotá in Colombia, in 2009 after studying economics. He started out in an assistant manager’s position before becoming international commerce director, managing customers and some procurement in the US, Europe, and Latin America.

After being promoted to vice president, Santiago decided to brush up his business skills with the Global MBA Program. ESSEC, a top MBA ranking university in France, was a logical choice. “The program has a focus on entrepreneurship and emerging markets, which was a good fit for me,” he says.

“We have an established way of doing things at the company and I wanted to learn what the world is shifting to, and bring this knowledge back to propel the company to the next stage. ESSEC has given me that.”

For other MBAs who have worked in family-run firms, it’s not always assumed they will follow in their family’s footsteps after graduation, says Jonathan Seeyave, a Global MBA student at ESSEC. “First, I want to find a job to get some more experience in management or finance,” he says.

Jonathan’s late grandfather also started his family’s business back in 1952, based in Mauritius. He began by selling ice-cream, before moving into frozen foods on a larger scale and the company eventually became known as Happy World Group. Today, it has a retail arm, shipping services, document managing services and a commercial property business.

Jonathan was in the latter for about eight years. “But it wasn’t assumed that I would enter the company,” he explains. “I worked in Japan at the time and I hadn’t been in Mauritius for a large part of my life; I left when I was ten to study in England.

“So I wanted to discover the family business and get in touch with my family again.” Several years down the line and an MBA is his way of building a skill-set to eventually take back to the company. “It gives you an all-round set of skills for any business and really does develop those skills,” he says.

“You can take it back to the family firm and see how it can develop or enhance the business.”

But he hopes to work independently in industry immediately after graduation. And this is beneficial for anyone seeking to one day run family operations, agrees Santiago. “Right now my ambition would be to work in business development here in France,” he says.

“I’d like to place myself perhaps in the automotive sector, develop a network and always be on the lookout for business opportunities for my company, before going back to Columbia at some point.

“I want to learn about the entrepreneurial culture here. It’s good to learn from outside [your country] so that I can, in the future, bring the knowledge back with me to Colombia.”

Jonathan has similar ambitions. He admits he’d like to run his family’s company one day, but in the meantime an MBA from ESSEC and some work in Europe or in emerging markets are his next career steps.  

“Or I want to at least play an important role in the company or provide guidance,” he adds, “as well as establish the vision of the company, of where we are now and where we want to go.”

It’s that ambition that is driving the next generation of family business leaders.